Federal Circuit Expands The Supreme Court’s SAS Holding To Require Institution On All Grounds Argued In An IPR Petition
07/10/2018On July 2, 2018, a motions panel of the Court of Appeals for the Federal Circuit (CAFC) issued an order remanding an inter partes review (IPR) to the Patent Trial and Appeal Board (PTAB). Adidas AG v. Nike, Inc., Appeal Nos. 2018-1180 and 2018-1181. The CAFC noted that the final written decision that was the subject of the appeal had addressed only one of the two sets of grounds of unpatentability that had been asserted in the petition for inter partes review, and directed the PTAB to issue a new decision addressing both grounds.
An IPR is an administrative proceeding in which the PTAB reconsiders the patentability of one or more claims of an issued patent. An IPR begins with a petition submitted by the patent challenger. In the petition, the challenger explains which claim or claims are being challenged, and for each challenged claim asserts one or more grounds of unpatentability (e.g., one or more combinations of prior art).
As we previously reported, the U.S. Supreme Court has ruled that the PTAB is required to institute IPR of either all or none of the claims challenged in an IPR petition (the PTAB’s previous practice was sometimes to institute IPR of some, but not all, of the challenged claims). See Shearman & Sterling LLP, US Supreme Court Approves IPRs, But Requires Decision On All Challenged Claims, Need-to-Know Litigation Weekly, May 1, 2018, in SAS Inst. Inc. v. Iancu, 584 U.S. ____ (2018). However, the Court did not address the question of whether the PTAB may institute IPR on some, but not all, of the grounds asserted in the petition.
In its July 2 decision, the CAFC expanded the SAS holding and required the PTAB to issue a final written decision as to not just every challenged claim, but every asserted ground in an IPR petition. The CAFC reasoned that in SAS, the Supreme Court held that “the petitioner’s contentions, not the Director’s discretion, define the scope of the litigation all the way from institution through to conclusion.” The CAFC held that institution of IPR on only some of the grounds asserted in a petition was inconsistent with the SAS holding.
The PTAB now has only two choices when addressing a petition for IPR: issue a final written decision on every ground asserted in the petition, or deny institution entirely. If several grounds are asserted in a petition and an IPR is instituted, the parties and the PTAB will need to litigate all of those grounds, instead of only litigating the grounds the PTAB finds most likely to lead to unpatentability, as per the current practice.
This new rule will lead to difficult choices for both petitioners and the PTAB itself. If petitioners continue to include multiple grounds in their petitions, and individual IPRs thus become more complicated, the PTAB may begin to use its discretion to deny institution of some petitions in order to reduce its overall workload. And when a multiple-ground petition is instituted, it will be more complicated and expensive to litigate than it would have been if only some of the grounds were instituted, which could be problematic, given that low cost and high speed are two of the benefits of IPRs.
Petitioners may be better off including fewer grounds in their petitions, which should both encourage institution and avoid an increase in the complexity and cost of IPRs. On the other hand, petitioners can now include multiple grounds in their petitions knowing that, if an IPR is instituted, the patent owner will be forced to address all of those grounds—the risk, of course, being that the PTAB may be less likely to institute IPRs on such petitions. This could be tactically important in some cases, for example where the best responses to each of several grounds might be inconsistent with each other.